Investments are an excellent tool for women to grow their savings and wealth and meet their short-term and long-term financial goals. If you are a working woman, you can apportion a part of your disposable income every month into investments. Doing this can help you save towards many goals like taking a vacation, higher education, buying a vehicle or simply saving some extra money for a rainy day.

Although, it is by no means necessary that you must be a working woman to invest. Even if you are a woman who stays at home to take care of her family, you can still invest in the markets to earn money to meet your own and your family's long-term financial goals. It's never too late to start investing. Some women who start late think they have missed the boat. But that's far from true. It's never too late to start investing in your financial future.

However, not all investments are made equal. Every form of investment may not be suitable for new investors. Some routes are far less cumbersome when starting your investment journey than others. You can enjoy a hassle-free investment journey by choosing an appropriate investment route. To do that, you need to be familiar with the different tools of investments. Just like a car can't operate without gas, assets can't function without their tools.

Understanding The Different Types of Investment

Some women don't have the time to manage their financial portfolios. Others like to be actively involved in managing their finances. No two investment portfolios or methods are the same. That's why it's first essential to ascertain how much time you can commit to managing your portfolio, which will influence your investment options.

Depending on your investment goals and risk appetite, here are some investment options to consider:

1) Equities or Stocks

Equities or stocks are part ownership in a publicly-traded company. They can be traded on stock exchanges such as the Bombay Stock Exchange or the National Stock Exchange. When you purchase shares of a company, you own a small part of the company.

You can profit from investments in equities either through a rise in price or by receiving dividends. However, do note that equities are high-risk investments since volatile share prices. Share prices fluctuate because the underlying price of shares is linked to many factors such as the company's balance sheet, leadership, market news, etc. Higher the return expectation from a company, the higher the risk. If you invest in stocks, you may risk losing your money.

Investment in this asset class is not for everyone. It requires high vigilance and active rebalancing that can take some time. However, if you do your research, you can also benefit from equity investments. These are ideal for women who have the time to research and understand the stock market.

2) Fixed Income Investments or Bonds

Fixed income instruments or bonds are financial instruments that pay investors a regular return in the form of fixed interest payments until the investment maturities. At maturity, the principal is repaid. They are essentially debt instruments in which the issuer company borrows money from the lender, i.e. the bondholder. In return, the company must pay interest on the principal amount.

Government and corporate bonds are the most common types of fixed income products. Governments borrow money for their projects and infrastructural requirements. Companies may borrow funds for expansion and growth. In most cases, governments and companies go in for bonds because the money they require is larger than what can be issued by banks. Hence, these entities issue bonds in the public markets.

There are various types of bonds available for purchase. Some of these include government bonds such as sovereign gold bonds, corporate bonds such as secured and non-secured bonds, tax-saving bonds such as capital gains bonds, bank and financial institution bonds such as the RBI bonds, etc. These are considered relatively less risky than equities.

3) Cash and Cash Equivalents

Cash and cash equivalents are highly-secure financial assets that come with the added advantage of liquidity. They can be converted into cash easily for various requirements. Examples include high-interest savings accounts, short-term guaranteed investment certificates and debt instruments with less than a year of maturity. These are ideal investments for those looking for easy access to cash.

How to Invest in These Avenues?

An excellent way to diversify your portfolio and invest in all these asset classes is to invest in a mutual fund.

A mutual fund is an investment vehicle that pools money from various investors and uses the funds to invest in the stock market and debt instruments. Mutual funds can be actively or passively managed funds. You can buy units of mutual funds according to the amount of capital at your disposal. You can purchase mutual fund units in the physical form through a Statement of Account from an Asset Management Company. Or you can invest in mutual funds through a Demat Account.

Takeaway

Investments can turn into gambling in the flick of an eye if you let your emotions overpower you. It's important to stay calm and vigilant throughout your investment journey. You could consider working with a financial advisor to understand your financial goals and invest according to that.